Tax Deform – Rob from the Poor and Give to the Rich

The GOP’s efforts to strip hundreds of billions of dollars in health benefits from the poor and the middle class and pass the ‘savings’ directly along to the 1%, failed. Thankfully. Now they’re moving on to their next priority – stripping the rest of the country of hundreds of billions of dollars in other benefits in order to pass the ‘savings’ directly to the 1%. This time they’re calling it ‘Tax Reform.’ It’s deja vu all over again.

The specific plan hasn’t been released yet, but they’ve outlined the goals, and it’s not good. In order to understand what’s happening, we need to understand the last two crazy multi-trillion dollar tax giveaways to the rich. Surprise! They came from the most recent two term GOP Presidents, Reagan and George W Bush. Double surprise! Both were disastrous for regular folks who have to work to survive.

First, we have to begin with the GOP theory. Part fantasy, part outright lie. The fundamental idea behind GOP tax policy since the election of Ronald Reagan is the idea that if you give rich people as much money as possible, everyone will be better off. It’s called “supply side economics.” Before Reagan was elected, even sane Republicans called it “Voodoo Economics.” Even that gives it too much credit. But if you want to debunk it, you should first understand it.

In GOP fantasy land, if the rich get rich enough, we’ll all experience an investment utopia. Rather than spending their hoarded cash on yachts, vacation homes, and fancy cars, or just sending it to offshore banks, they’ll open new businesses. We’ll have huge economic growth, and the benefits will “trickle down” prosperity all over the rest of us normal folks. As crazy as it seems today, “trickle down” was the phrase the GOP used to explain their own theory. It is fitting, because the rest of us did get trickled on by the economic elite, but it wasn’t prosperity that was raining from the skies.

“Yet, by some mystical and horrible law of nature, the political pendulum swung back again. It’s like the seasons – a summer of Democrats fixing the economy must always be followed by a winter of Republicans taking a wrecking ball to it”

Another favored GOP metaphor – a rising tide lifts all boats. The fantasy here is that if the economy swells, everyone will rise. In reality, these policies were only great for people with boats. But the boatless, the 99%, the overwhelming majority of the American people, which includes every single person who has to worry about providing for their family… that rising tide was nothing more than a deadly wave threatening to sweep them under and drown them. The history is hard to argue with.

Reagan’s blockbuster tax cuts led to a recession that cost George HW Bush a second term and exploded the budget so badly that “read my lips, no new taxes” turned into “uhhh… if we want to keep the lights on in the Pentagon, maybe some new taxes would be helpful.” Then Bill Clinton came in, cleaned up the mess, balanced the federal government’s books, and presided over the greatest economic growth period since the post-WWII boom.

Refusing to learn from history, HW’s son W. Bush tried the same Voodoo Economics Reagan had used before, with another trillion+ dollar tax cut for the wealthy. He promised an economic surge that would trickle down on the rest of us. It worked so well last time, right?

Reagan is a distant memory for many of us, but even the young underemployed should remember how George W. Bush ruined the economy and the budget with his Trillion Dollar Tax Gift to the Rich – Part 2. W. came into office with a BUDGET SURPLUS. As miraculous as that might sound for our government, we were actually taking in more money than we spent. We were paying down the national debt. W.’s response was to slash the tax rates for the richest Americans, which he promised would pay for itself in economic growth that benefited everyone, because a rising tide trickles down lucky charms yadda yadda yadda The Great Recession. W. blew up the economy.

There were other factors, such as deregulating Wall Street. Yet, even before the housing bubble popped, it was obvious that massive tax cuts for rich folks had failed to stimulate growth. Rather than paying for itself, the loss of revenue led to the greatest ballooning of the National Debt in American history. All these things absolutely, irrefutably HAPPENED. Recently.

It was the worst economic downturn since the Great Depression. Tens of millions lost their jobs and/or their homes. Like Bill Clinton before him, Obama picked up the pieces. He stopped the bleeding. The wound was greater this time, but we managed to start growing again. America went back to work. The deficit shrank. These are facts.

Yet, by some mystical and horrible law of nature, the political pendulum swung back again. It’s like the seasons – a summer of Democrats fixing the economy must always be followed by a winter of Republicans taking a wrecking ball to it. And so we find ourselves where we are today – the next GOP legislative priority is so-called “Tax Reform.” Their major goals are slashing the corporate tax rate, cutting taxes on investment income, and abolishing the Alternative Minimum Tax, which is designed to stop the rich from abusing loopholes. Hooray?

There is one major plot line underlying all of these developments we haven’t discussed yet. About 40 years ago, American wages (adjusted for inflation) just… stopped growing. They had grown steadily throughout the economic scale and in every part of the country, and then… they just stopped. They’ve been flat for 40 years.

The middle class is collapsing. All this while productivity has steadily increased and the economy (with two big hiccups we already discussed) has expanded. So, where did all that money go? Into the pockets of the wealthy. It was only WAGES that were flat. Profits have been booming. If your job consists of owning stuff, we’re living in a veritable Golden Age. It’s easy to deal yourself a Royal Flush as long as you get to stack the deck first, and rich folks own much of our government.

Let me make it clear – Obama didn’t fix this. Bill Clinton didn’t fix this. The gap between the rich and the poor grew during both of their administrations. Tax policy isn’t the only way the rich have further enriched themselves at the cost of the rest of the nation, but it is the biggest way.

Now Trump and the GOP want to go back for another round. Some Trump supporters still think he’s a populist sticking up for the little guy. They believe he won’t back a massive tax cut for rich folks like him that leaves the rest of the country behind. Who knows? Maybe they’re right. (Spoiler – Sorry, guys, if you still think that, you absolutely haven’t been paying attention. But on behalf of everyone who doesn’t want to get poorer while the rich get richer, I sincerely welcome you to join the fight.)

Travis Hepburn was a Top 25-ranked debater on a National Championship-winning team at Creighton University. He currently manages an Assisted Living Facility for the mentally ill. Politics and policy have remained an unhealthy fixation for him for over 20 years.

I really don’t understand why there’s even a discussion on this anymore. Sure a bunch of people get a lot of free money in their pockets right away but then the economy tanks and they lose all of that. My partner works with elective surgeries so he makes money when people have money to spend. When Republicans are in charge his taxes go down but so does his income.